April 17, 2016

The Massachusetts House on Wednesday passed a bill that
would raise the cap on solar net metering while
lowering reimbursement rates for solar energy.

The bill, H.4173,
passed the House by a vote of 152 to 1.

State Rep. Thomas Golden, D-Lowell, chairman of the Joint
Committee on Telecommunications, Utilities and Energy and a member of the
conference committee, said the bill "finds a balanced solution between the
rates that would keep our solar industry thriving and moving forward, while
still staying cognizant of the rates our constituents, the ratepayers, pay on a
daily basis."

The lone dissenter was State Rep. Jonathan Hecht,
D-Watertown, who warned that the bill would slow the growth of the solar energy
industry. "I'm afraid if we do lower net metering rates by that large
amount, it means many solar projects simply will not get built," Hecht
said. "I remain deeply concerned that this legislation takes us down the
wrong path on solar policy and once in place it will prove difficult to
correct."

The bill has been in negotiations by a House-Senate
conference committee for months, and its impending passage would clear the way
for lawmakers to deal with the next big energy debate: an omnibus bill that is
expected to pave the way for greater use of hydropower and offshore wind.

"I think solar has gotten more than the fair share of
the debate so far, but quite frankly, people want us to talk about, they want
to hear more about offshore wind, they want to hear more about hydro,"
said House Speaker Robert DeLeo, D-Winthrop.

The net metering bill was released from a committee of House-Senate negotiators
Tuesday evening.

Currently, the cap on net metering, the practice by which
someone can generate solar energy and receive a financial credit for energy
they generated but did not use, has been stalling solar energy projects around
the state.

The bill would lift the cap on solar net metering by 3
percent for both public and private projects. It would decrease the
reimbursement rate paid to most solar energy producers by 40 percent.

Solar net metering compromise lifts cap, cuts reimbursement

The compromise bill, which will be voted on this week,
received a mixed reaction from the solar industry.

The lower rate would not apply to small residential
projects, like a solar panel installed on a homeowner's roof, or to
government-owned projects. It would apply to larger commercial and residential
solar projects and to community shared solar, which are solar projects that an
entire community can buy into. Existing projects could keep the old rate for 25
years.

The bill would allow the Department of Energy to charge
customers a minimum monthly charge. It directs the Massachusetts Department of
Energy Resources to craft a new version of an incentive program, referred to as
SREC, in a way that provides a financial incentive for low-income solar
projects.

The compromise bill has its critics. John Regan, executive
vice president of government affairs for Associated Industries of
Massachusetts, a business trade group, wrote in a letter to legislators that
the compromise bill "lacks any real reform" and will cost ratepayers
$8 billion over the next decade. The business group argues that the cut to
reimbursement rates is not significant enough and applies to only a small
portion of projects. It called the maintenance of higher rates for governmental
projects "a sad case of 'taking care of your own' while others pay."

"We may not be killing the goose that's laid that
golden solar egg, but we are certainly starving that goose."

Non-profits representing low-income individuals said
the bill perpetuates income inequality by keeping the higher reimbursement
rates for homeowners but not for projects that benefit lower income
individuals, which are generally large-scale projects that are shared by a
community or built in affordable housing complexes.

But overall, criticism was more muted than it has been for
previous iterations of the bill. Solar companies urged lawmakers to pass the
bill in order to lift the cap and end the bottleneck of stalled projects, even
as they expressed concern that the new cap would be hit in 2017. The utility
National Grid said it was pleased with the resolution, even as it urged
lawmakers to develop a long-term strategy for limiting the cost of solar to
other ratepayers.

Golden called the compromise a great bill. "I think
that people should be very happy with it. We're lifting the caps, we're moving
solar forward," Golden said.

A group of non-profits is warning that the solar net
metering bill could harm poor people while benefiting middle class and
wealthier homeowners.

One concern is that the cap will be hit again within a year.
"The slight increase of 3 percent is immediately necessary, but it means
we'll have to come back here very shortly once again to debate raising the net
metering cap," said State Rep. Frank Smizik, D-Brookline.

Golden brushed off those concerns. "Having a cap and
deciding where we're going to go a year from now or a year-and-a-half from now
is at the discretion of the House and the Senate," Golden said. "The
decision of what will happen tomorrow, we'll figure that out a year from
now."

Some lawmakers said they only reluctantly voted for the bill
in order to lift the cap. "We may not be killing the goose that's laid
that golden solar egg, but we are certainly starving that goose or putting it
on a restricted diet," said State Rep. Denise Provost, D-Somerville.

The Senate is expected to consider the bill Thursday. If it
passes, it will go to Gov. Charlie Baker, who is likely to sign the bill.

Baker spokesman Billy Pitman said, "Governor Baker
believes the conference committee's report is an encouraging step toward
building upon the continued success of the Commonwealth's solar industry and
ensuring a viable, sustainable and affordable solar market for ratepayers as
the administration continues its balanced approach to diversifying a renewable
energy portfolio that includes cost-effective, hydropower generation."

If the net metering bill becomes law, lawmakers will turn
their attention to an omnibus energy bill, which is still being drafted by a
legislative committee.

That bill is likely to include a version of a proposal introduced by Baker that would require
utilities to solicit long-term contracts for hydroelectric power. It is also
likely to address the expansion of offshore wind.

DeLeo said he anticipates debate on the larger energy bill
in May or June. He called it "one of the top priorities" of the
House.

One remaining loose end related to solar energy is a decision by the Massachusetts Department of Energy Resources on
how to fashion a new incentive program for solar energy. The current incentive
program, referred to as SREC, an acronym for Solar Renewable Energy
Certificates, has reached its cap. Administration officials were waiting to see
what the Legislature passed related to net metering before they released their
proposals for a new SREC program.